Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

2. Transaction Analysis

Journal Entries: Debits and Credits

Financial Accounting

2. Transaction Analysis

Journal Entries: Debits and Credits

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Multiple Choice

Which manual bookkeeping system has a built-in way to check for errors by ensuring that total debits always equal total credits?

Cash basis accounting system

Double-entry bookkeeping system

Single-entry bookkeeping system

Accrual basis accounting system

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Verified step by step guidance

Understand the concept of double-entry bookkeeping: This system is designed to ensure that every financial transaction is recorded in at least two accounts, with one account being debited and the other credited. This ensures that total debits always equal total credits, providing a built-in error-checking mechanism.

Compare the double-entry bookkeeping system with other systems mentioned: Single-entry bookkeeping records transactions in only one account, which does not provide a way to check for errors through balancing debits and credits. Cash basis and accrual basis accounting systems are methods of recognizing revenue and expenses, not systems for recording transactions.

Recognize the importance of the error-checking feature: The double-entry system helps detect errors such as omitted transactions, incorrect amounts, or misclassified accounts, as the accounting equation (Assets = Liabilities + Equity) must always balance.

Identify the key advantage of double-entry bookkeeping: It provides a comprehensive view of financial transactions and ensures the integrity of financial statements by maintaining the balance between debits and credits.

Conclude that the double-entry bookkeeping system is the correct answer because it is specifically designed to ensure that total debits always equal total credits, unlike the other systems listed.